Call rates fell on comfortable liquidity conditions

Liquidity conditions remained comfortable for most of the week, with the demand for funds staying near the RBI’s repo rate. The interbank call money rate ended at 7.90% on November 28 as against 8% on November 21. Outflows towards payment of gilts purchased at last week’s gilt auction and state development bonds exerted upward pressure on the overnight borrowing rate. The RBI’s fund infusions kept systemic liquidity in check. The banking regulator disbursed Rs 33,000 cr through two term repo auctions, each of 14-day tenor.

Gilt prices strengthen on rate cut hopes and fall in crude oil prices

After moving in a tight range for most of the week, the government bond prices rose sharply in the last session following the outcome of the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna. The yield of the benchmark 8.40% 2024 paper ended at 8.09% on November 28 as against 8.17% on November 21. Gilts strengthened, primarily taking cues from global crude oil prices, which plummeted to multi-year lows amid speculation about the OPEC’s decision on oil production. A flurry of gilt buying was witnessed after the cartel decided to continue with present output levels. However, the RBI’s OMO bond sale announcement dented sentiment slightly. The central bank is scheduled to bring in a fresh supply of bonds to the tune of Rs 12,000 cr into the market on December 1.

Term of the week

Redemption value – It is the amount received by the bond holder other than the coupon amount when the bond is redeemed. The redemption amount may be greater, equal to, or less than the face value of the bond.

Call rates fell on comfortable liquidity conditions

Liquidity conditions remained comfortable for most of the week, with the demand for funds staying near the RBI’s repo rate. The interbank call money rate ended at 7.90% on November 28 as against 8% on November 21. Outflows towards payment of gilts purchased at last week’s gilt auction and state development bonds exerted upward pressure on the overnight borrowing rate. The RBI’s fund infusions kept systemic liquidity in check. The banking regulator disbursed Rs 33,000 cr through two term repo auctions, each of 14-day tenor.

Gilt prices strengthen on rate cut hopes and fall in crude oil prices

After moving in a tight range for most of the week, the government bond prices rose sharply in the last session following the outcome of the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna. The yield of the benchmark 8.40% 2024 paper ended at 8.09% on November 28 as against 8.17% on November 21. Gilts strengthened, primarily taking cues from global crude oil prices, which plummeted to multi-year lows amid speculation about the OPEC’s decision on oil production. A flurry of gilt buying was witnessed after the cartel decided to continue with present output levels. However, the RBI’s OMO bond sale announcement dented sentiment slightly. The central bank is scheduled to bring in a fresh supply of bonds to the tune of Rs 12,000 cr into the market on December 1.

Term of the week

Redemption value – It is the amount received by the bond holder other than the coupon amount when the bond is redeemed. The redemption amount may be greater, equal to, or less than the face value of the bond.